What is the actual materials cost of the 3G addition (that Apple is charging $130 extra for)? From the article, one can infer that it is no higher than $60, but probably much less, say around $30 (since I would assume that the 32GB memory costs $30 more, and one can back this out from the $287 materials cost for the 32GB model versus the $220 for the 16GB).
Why would Apple be getting a gross margin of closer to 75% on this (as opposed to around 50% for everything else)? I wonder if there a payment to ATT embedded in the pricing (to make up for the seemingly very good $30 per month unlimited data 3G deal).
I was going to make a similar list, but you beat me to it.
I'd like to see iSuppli do a "breakdown" analysis of the latest version of MS Office. Let's see: 10 cents to stamp the DVD (if even that) and about 5 cents to make the box it ships in. And how much do they charge for Office these days?
Just one example of why comparing the component costs to the sale price is an exercise in ignorance.
What is the actual materials cost of the 3G addition (that Apple is charging $130 extra for)?
According to a previous iSuppli breakdown for the 3GS it's about $20 in components, but that of course excludes many things. I've seen 3G add ons for networks be more than $150 and I've paid $300 for a 3G USB card so it doesn't seem excessive for the market though I'm sure Apple is making a healthy profit.
What I'm curious about with the 3G model are the chips they'll use. They say unlocked but only mention AT&T. It wouldn't be the first time they've not specified a function on their spec sheet to keep it simple. Maybe it does have the 1700MHz band for T-Mobile USA but they won't publicly state it (or enable it) until after the contract ends.
Surely it has at least 7.2Mbps HSDPA, but what about 2.9Mbps HSUPA for upstream. I think that is the next stop for 3GSM mobiles. CAn we infer that the chips we find in the iPad will likely be used in the next iPhone?
It is not unreasonable to believe that Apples operating margine to be between 10-15% ($50-$75 USD) when spread across 1MM units.
Apple's operating margin in general is about 30% and their net profit margin is 20%. I think this device should fall pretty much in line with those numbers.
Wow! Only $10 a unit to manufacture, boy those machines work cheap.
Machines do work cheap that is why factories are made up of machines. You have heard of Ford and his assembly line, right?
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Reminds me of that huge Budweiser plant I toured, nearly completely automated. 5 people worked the whole floor, making 1000's of cans of beer a second. The there were more tour guides and truck drivers carting off the beer and bringing supplies than factory workers.
Yep a generic plant for a generic bear! You do have choice with craft bear at $5 a bottle. Besides all that cheaply made bear means there is plenty of money to feed the horses.
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Maybe Apple could due away with a little profit, say $50 a unit, and give some people in U.S. jobs pushing paper around, brainstorming or something.
I'm almost certain you didn't mean to say what you did above because I simply don't believe anybody on this planet is that ignorant. First off Apple employees a lot of people in the US and is currently building another campus to higher even more. The money to employ those people comes from the cash between the 219 number and Apples $499 price. The $219 number is the cost to build and has nothing to do with running Apple, it's engineering departments or any of the other common business expenses.
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Remember, a economy works when what goes around, comes around.
You must be a very left leaning Democrate. The economy works when people have money and the desire to spend it. It does not work when a large portion of the population expects to get something for free or as you imply handouts.
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Keep "take, take, take" and nobody will have nothing eventually.
Again I'm not sure if you are trying to troll here or are just amazingly ignorant. It's a business transaction when buying from Apple. You see what they have on offer and buy based upon the item meeting your needs. It is an exchange that you are free to avoid.
That's an awful lot of R&D money to take an iPod touch and make it 3x as big.
Actually when you build your own processor it is a lot of R&D money so yes. Apple paid 278M for PA Semi. The 150 extra engineers have been working on something since April 2008. IF we pay them 100K each on average we get another 15M per year in salary. Add in the ARM and Power VR IP licenses. For a few million more and we are already over 300M without selling a single IPAD. That's called risk and Apple has to mange the risk to make a profit. If Apple sell only one IPAD they still spent the 300M.
That's an awful lot of R&D money to take an iPod touch and make it 3x as big.
How much was PA Semi? About $280m?
So, assuming they sell 5 million of these things, that's $56 of outgoings per unit right there before you even think about the ongoing costs for running the place for the last couple of years.
Comments
From that 270, lets take out -
Price of packaging (and packaging development)
Price of waste management (wait, this is china, NVM)
Shipping from China
Distribution in the US
Cost of sales (wholesale discount, internal sales people, marketing, sales software, inventory management, etc).
Administrative Charges (at apple, and other location)
Development and Design Charges (a not insubstantial charge)
It is not unreasonable to believe that Apples operating margine to be between 10-15% ($50-$75 USD) when spread across 1MM units.
It is probable that the cost of developing, packaging, marketing and shipping this device will exceeed the actual manufacture cost of this product.
That's an awful lot of R&D money to take an iPod touch and make it 3x as big.
Then why didn't you or somebody else do it?
Why would Apple be getting a gross margin of closer to 75% on this (as opposed to around 50% for everything else)? I wonder if there a payment to ATT embedded in the pricing (to make up for the seemingly very good $30 per month unlimited data 3G deal).
I gather you have the expertise to price out the variables and other fixed costs.
What do you think that they should charge/assign/account just for:
- Research & Development
- Advertising/Promotion
- Sales & Marketing
- Distribution/Shipping
- Accounting
- Legal
- On-line/In-Store Support
- OS
- Apps
- iTunes App/iBook Book Store
- Third-Party Licenses
- Liability Insurance
- Fixed Overheads, e.g., equipment depreciations/property taxes/salaries
Or don't you believe in free enterprise?Well done. I love to see newer posters with a logical mind.
I gather you have the expertise to price out the variables and other fixed costs.
What do you think that they should charge/assign/account just for:
- Research & Development
- Advertising/Promotion
- Sales & Marketing
- Distribution/Shipping
- Accounting
- Legal
- On-line/In-Store Support
- OS
- Apps
- iTunes App/iBook Book Store
- Third-Party Licenses
- Liability Insurance
- Fixed Overheads, e.g., equipment depreciations/property taxes/salaries
Or don't you believe in free enterprise?I was going to make a similar list, but you beat me to it.
I'd like to see iSuppli do a "breakdown" analysis of the latest version of MS Office. Let's see: 10 cents to stamp the DVD (if even that) and about 5 cents to make the box it ships in. And how much do they charge for Office these days?
Just one example of why comparing the component costs to the sale price is an exercise in ignorance.
Go buy the parts, build it yourself, and let the rest of us live in peace.
Well put!!!!!
That's an awful lot of R&D money to take an iPod touch and make it 3x as big.
and took 3 years to come up with?
Well done. I love to see newer posters with a logical mind.
you tawlking about me again?
I gather you have the expertise to price out the variables and other fixed costs.
What do you think that they should charge/assign/account just for:
- Research & Development
- Packaging
- Advertising/Promotion
- Sales & Marketing
- Distribution/Shipping
- Accounting
- Legal
- On-line/In-Store Support
- OS
- Apps
- iTunes App/iBook Book Store
- Third-Party Licenses
- Liability Insurance
- Fixed Overheads, e.g., equipment depreciations/property taxes/salaries
- Keeping Green
Or don't you believe in free enterprise?You really think I believe that's the final cost? Literally? Did you get that out of a textbook?
What is the actual materials cost of the 3G addition (that Apple is charging $130 extra for)?
According to a previous iSuppli breakdown for the 3GS it's about $20 in components, but that of course excludes many things. I've seen 3G add ons for networks be more than $150 and I've paid $300 for a 3G USB card so it doesn't seem excessive for the market though I'm sure Apple is making a healthy profit.What I'm curious about with the 3G model are the chips they'll use. They say unlocked but only mention AT&T. It wouldn't be the first time they've not specified a function on their spec sheet to keep it simple. Maybe it does have the 1700MHz band for T-Mobile USA but they won't publicly state it (or enable it) until after the contract ends.
Surely it has at least 7.2Mbps HSDPA, but what about 2.9Mbps HSUPA for upstream. I think that is the next stop for 3GSM mobiles. CAn we infer that the chips we find in the iPad will likely be used in the next iPhone?
you tawlking about me again?
Please shut up, instead of making an ass* of yourself.
*I mean that in the sense of asinus subgenus
Just one example of why comparing the component costs to the sale price is an exercise in ignorance.
Generally, selling prices trend towards the marginal cost of production.
Just one example of why comparing the component costs to the sale price is an exercise in enlightenment.
It is not unreasonable to believe that Apples operating margine to be between 10-15% ($50-$75 USD) when spread across 1MM units.
Apple's operating margin in general is about 30% and their net profit margin is 20%. I think this device should fall pretty much in line with those numbers.
Wow! Only $10 a unit to manufacture, boy those machines work cheap.
Machines do work cheap that is why factories are made up of machines. You have heard of Ford and his assembly line, right?
Reminds me of that huge Budweiser plant I toured, nearly completely automated. 5 people worked the whole floor, making 1000's of cans of beer a second. The there were more tour guides and truck drivers carting off the beer and bringing supplies than factory workers.
Yep a generic plant for a generic bear! You do have choice with craft bear at $5 a bottle. Besides all that cheaply made bear means there is plenty of money to feed the horses.
Maybe Apple could due away with a little profit, say $50 a unit, and give some people in U.S. jobs pushing paper around, brainstorming or something.
I'm almost certain you didn't mean to say what you did above because I simply don't believe anybody on this planet is that ignorant. First off Apple employees a lot of people in the US and is currently building another campus to higher even more. The money to employ those people comes from the cash between the 219 number and Apples $499 price. The $219 number is the cost to build and has nothing to do with running Apple, it's engineering departments or any of the other common business expenses.
Remember, a economy works when what goes around, comes around.
You must be a very left leaning Democrate. The economy works when people have money and the desire to spend it. It does not work when a large portion of the population expects to get something for free or as you imply handouts.
Keep "take, take, take" and nobody will have nothing eventually.
Again I'm not sure if you are trying to troll here or are just amazingly ignorant. It's a business transaction when buying from Apple. You see what they have on offer and buy based upon the item meeting your needs. It is an exchange that you are free to avoid.
Dave
You really think I believe that's the final cost? Literally? Did you get that out of a textbook?
Yes, just like everybody else has
No. Actually it is one of the courses I teach.
That's an awful lot of R&D money to take an iPod touch and make it 3x as big.
Actually when you build your own processor it is a lot of R&D money so yes. Apple paid 278M for PA Semi. The 150 extra engineers have been working on something since April 2008. IF we pay them 100K each on average we get another 15M per year in salary. Add in the ARM and Power VR IP licenses. For a few million more and we are already over 300M without selling a single IPAD. That's called risk and Apple has to mange the risk to make a profit. If Apple sell only one IPAD they still spent the 300M.
That's an awful lot of R&D money to take an iPod touch and make it 3x as big.
How much was PA Semi? About $280m?
So, assuming they sell 5 million of these things, that's $56 of outgoings per unit right there before you even think about the ongoing costs for running the place for the last couple of years.
Really, the iPad is a great product in diapers... I'll wait to get at least the teenage version
Oh, grow up...